U.S. Cannabis Spot Index down 2.9% to $1,320 per pound.
The simple average (non-volume weighted) price decreased $79 to $1,476 per pound, with 68% of transactions (one standard deviation) in the $754 to $2,198 per pound range. The average reported deal size declined to 2.0 pounds from 2.2 pounds last week. In grams, the Spot price was $2.91 and the simple average price was $3.25.
The relative frequency of trades for indoor flower decreased by 3% week-over-week. The relative frequency of transactions involving outdoor product increased by the same proportion, while that for greenhouse flower was unchanged. Greenhouse flower’s share of the total documented weight moved nationally expanded by 1% this week. The relative volume of warehouse product shrank by the same proportion, while that for outdoor flower was stable.
The U.S. Spot Index declined by 2.9% this week to settle at $1,320 per pound. Downturns in three of the five major markets pulled down the national average, as Washington State and Nevada were the only states of that group to see rises in their Spot prices, and modest ones at that. Additionally, rates slid downward in the secondary markets of Illinois and Michigan, which had earlier this year been applying upward pressure on the U.S. Spot. Reports from Oregon indicate that the bulk of the summer light-deprivation crop has not yet come in, with new, fresh supply expected to hit the market later this month or in early September.
The national volume-weighted price for flower to be sold to general consumers decreased this week on downturns in that sector of the market in California and Colorado, as well as in Oregon.
Prices for medical flower rose this week. Rates for product designated for registered patients saw upticks in Washington State, Nevada, and Massachusetts, while the medical-only markets of Maine, Connecticut, D.C., and Vermont experienced increases in their Spot prices.
February 2020 Forward initially assessed at $1,200 per pound.
The average reported forward deal size was unchanged at 48 pounds. The proportion of forward deals for outdoor, greenhouse, and indoor-grown flower was 55%, 29%, and 16% of forward arrangements, respectively. The average forward deal sizes for monthly delivery for outdoor, greenhouse, and indoor-grown flower were 42 pounds, 52 pounds, and 64 pounds, respectively.
Several factors could combine to exert upward pressure on the U.S. Spot at the end of this year and in early 2020. As we discuss below, Illinois’ adult-use legalization law appears as if it has laid the groundwork for tight supply in the second-largest state by population to permit a recreational cannabis industry. Additionally, Michigan could begin adult-use sales late this year or in early 2020, although the scope of the market may be relatively small at the outset.
Finally, Los Angeles continues to make progress toward issuing what is expected to be around 240 additional retail licenses. Applications for such permits are scheduled to be accepted beginning in September. Once the licenses are issued, it will represent the largest retail expansion in California’s legal market since the initial opening of the adult-use system at the beginning of 2018, creating a major source of new wholesale demand and shelf space to be filled.
At $1,240 per pound, the September Forward represents a discount of 6.1% relative to the current U.S. Spot Price of $1,320 per pound. The premium or discount for each Forward price, relative to the U.S. Spot Index, is illustrated in the table below.
Headlines From This Week’s Premium Report:
July 2019’s Spot Rate Up 20% Compared to Same Month Last Year